When hiring a lawyer, discussing compensation should be one of the first things you do. Many lawyers work with a contingency plan.
Here’s what you need to know about this billing structure;
1. What Is a Contingency Fee?
A contingency fee is a payment your lawyer receives if they win your case. When hiring a personal injury attorney that works on a contingency plan, you should know that the professional will receive a percentage of the amount they negotiate with an insurer or obtain after winning your case in court.
Contingency plans are common in personal injury cases, and you’ll also find lawyers who offer this payment structure when working on judgment recovery cases.
If you hire an attorney on a contingency plan, you’ll have to pay them after settling the case in court or accepting a settlement from an insurer.
2. What Are the Benefits of a Contingency Fee Plan?
Hiring a lawyer on a contingency plan means you won’t have to pay anything if you don’t win your case. However, you might be liable for other expenses linked to the case, such as court filing fees.
This payment structure is also an excellent option if you want to avoid upfront fees. The alternative is to pay a retainer fee as well as an hourly rate, which means you’ll receive bills from your lawyer before your case is over.
These fees can quickly add up. Plus, upfront fees can limit your options when hiring a lawyer since you might not be able to afford the best attorneys in your area.
Another benefit of contingency plans is that your lawyer’s compensation varies based on the compensation you obtain. Since your lawyer gets a percentage of the money awarded to you, there is a strong motivation to maximize your compensation.
3. What Determines the Amount of a Contingency Fee?
A lawyer will look at different factors when deciding how much to charge you:
- They will assess the case and how much you can expect to get as a settlement or payout.
- Your lawyer will consider how much work the case will require.
- Risk levels are another crucial consideration. If the case doesn’t seem easy to win, your lawyer will likely increase their contingency fee to reflect the risk they are taking.
Some states also have caps on how much lawyers can charge with contingency plans. These caps can vary based on the amount of the settlement and on whether you’ll receive a judgment before or after the defendant’s response.
Plus, the American Bar Association has a set of standards to follow to charge reasonable contingency fees.
4. How Much Is the Typical Contingency Fee?
Most personal injury lawyers charge a contingency fee of around 30%. Some states set a cap at a third of the compensation, but it’s not unusual for lawyers in other states to charge as much as 40%.
If your case is simple and doesn’t represent much of a risk, you might be able to get a contingency fee as low as 20%. A lower percentage is also the norm if you’re expecting a large payout.
Note that the contingency fee may or may not cover expenses linked to the case, such as court fees, expert services, or travel expenses. It’s something you should discuss with your lawyer.
5. Can You Negotiate the Contingency Fee?
The answer is yes. You can negotiate the contingency fee and contact different lawyers to compare the contingency plans they can offer.
However, you should keep in mind that it’s worth it to hire a lawyer with a slightly higher contingency fee if they have a strong record of winning cases and maximizing payouts.
If you need help with a personal injury case, your best option is often to work with a lawyer who offers a contingency plan to avoid upfront fees. Don’t hesitate to ask questions regarding what the contingency plan covers and contact different lawyers to compare their contingency fees. Keep in mind that you can also negotiate your contingency fee.